CLSA has maintained its ‘outperform’ rating on REC and PFC, citing confidence in their asset quality. The brokerage noted that power financiers have shown robust performance in the genco, renewable, and infra segments over the past two years, with no major or new slippages observed. However, the discom book remains volatile and tricky.
CLSA expects power financiers to increase their provision coverage ratio (PCR) on discoms in the fourth quarter of FY25, although it is likely to remain within a range. Despite this, the brokerage continues to be comfortable with the overall asset quality of both PFC and REC. Additionally, write-backs of ₹22 billion to ₹25 billion are anticipated from pending bad assets, including the KSK Mahanadi write-backs, which are expected in the coming quarters.
On February 27, REC’s stock closed at ₹378.35, down by ₹5.25 or 1.37%, while PFC ended the day at ₹377.00, declining by ₹4.95 or 1.30%. Both stocks witnessed a dip despite the positive outlook from CLSA, indicating cautious investor sentiment in the market.
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